Barclays yesterday painted an upbeat picture of its outlook for the rest of the year, saying it was "confident" about the start it had made to the year compared to its high street banking competitors.
The bank indicated that, if current trends continue, income would be higher in the second half of the year, following rigorous cost cutting and bad debt control in the past 18 months.
Matt Barrett, chief executive, made what was a bold statement in banking parlance, saying Barclays was at the moment ahead of its target of making £1bn of cost cuts in a four-year plan ending this year.
Mr Barrett said Barclays had made a "disciplined" start to the year, which has included steering the bank away from areas the board believes could be at risk of worsening credit quality. That includes the mortgage market, where Barclays took only 4 per cent of net new lending, roughly half of its share of existing mortgages.
He told analysts in a pre-close statement the drop was due to Barclays' decision that much of the growth in the mortgage market has been in areas such as buy-to-let, generally seen as one of the most at risk areas if the economy takes a turn for the worse.
Barclays' costs were flat in the first three months compared to the same period last year despite the fact that the bank has absorbed a £150m charge for extra pension costs.
Analysts said the statement, coming ahead of Barclays interim results in August, was solid. Fox-Pitt Kelton issued a note saying: "Income, costs and bad debts were all flat on last year. Against our expectations of 1 per cent income growth, but larger cost and bad debt growth, this is encouraging."
Barclays, whose shares have risen nearly 40 per cent since hitting a low in March, saw its shares slip 1 per cent to 435p. The bank said business banking had shown a "good performance" over the current year, as had personal financial services, which increased business volumes during the period. It added that volumes had also increased at Barclays Capital, the group's investment banking division.
However, first-quarter dealing profits were lower against the same period last year, although they had "improved significantly" relative to the fourth quarter of 2002.
The bank, which was forced to take a hit for bad debt provisions to cover Latin America last year, said any further provisions would not be "material". Barclays along with other UK rivals such as Lloyds TSB have been reducing their exposure to the region, but also believe the economies there are stabilising.
Barclays said the economic cycle in the US looked promising, helped by the fact that there had not been any major corporate scandals recently. It indicated that Europe's economy, in contrast, was at an earlier stage in the cycle.